Where are you hiding, Mr Sarkozy? President sends his PM to face cameras as downgraded credit rating throws France into turmoil

France's President Nicolas Sarkozy sent his Prime Minister to face the press after the country was stripped of its top triple-A credit rating.

Mr Sarkozy today struggled to contain the damage amid the fall-out of the humiliating downgrade, which has happened just three months ahead of the right-wing leader's re-election bid.

However, instead of appearing before the media himself, the French leader instead sent prime minister Francois Fillon to try to convince sceptical voters that Standard & Poor's rating was just one indicator of economic health and that France was still a safe country trusted by investors.

Facing the music: French Prime Minister Francois Fillon holds a press conference following the announcement that the country had lost its top AAA rating

Struggling to contain the damage: President Nicolas Sarkozy sent his Prime Minister to face the cameras

Fillon said in a televised conference: 'This decision constitutes an alert which should not be dramatised any more than it should be underestimated.'

However Sarkozy's main opponent in the presidential race, Francois Hollande, pointed out that Sarkozy had staked his reputation on keeping the prized rating but now, he said, it was clear that he had failed miserably.

The Socialist, who the polls say will win the vote in April and May's re-election, said: 'It is (his) politics that have been downgraded, not France.'

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Today, Fillon said his country will push ahead with cost-cutting measures after its top-tier debt rating was downgraded, a blow with repercussions across financially beleaguered Europe.

Other European countries from Austria to Cyprus assailed ratings agency Standard & Poor's after a raft of downgrades Friday night. The move may make it more expensive for struggling countries to borrow money, reduce debts and avoid a new recession.

Fillon struck a sombre, measured tone when responding to the downgrade, which was particularly wounding to France's self-image and could hurt bailout efforts for struggling eurozone countries.

Sore point: Mr Sarkozy, who has sworn at ordinary members of the public before, insisted that the new debt rating 'changes nothing' for the eurozone's second biggest economy, after Germany

France is central to those efforts, and the downgrade, by pushing up its own borrowing costs, could make it harder for France to help others.

Fillon said the downgrade confirmed his conservative government's plans for more reforms to bring down debts, despite worries that more austerity measures could suffocate growth.

Standard & Poor's stripped France of its coveted AAA status, knocking it down one notch to AA+. It dropped Italy even lower. Germany retained its top-notch rating, but Portugal's debt was consigned to junk.

Cyprus' finance minister called Standard & Poor's two-notch downgrade of his eurozone country to junk status 'arbitrary and unfounded'.

German Chancellor Angela Merkel: The country's top-notch rating was unaffected

Kikis Kazamias said on Saturday that the agency ignored the island's deficit-cutting measures as well as the discovery of significant offshore natural gas deposits. He said the action illustrates once more how credit ratings agencies exacerbate Europe's debt crisis.

Austria's chancellor criticized S&P's decision to strip his country of the top AAA rating, and noted that his coalition government is working on an austerity package.

Werner Faymann wrote on his Facebook page that 'Austria's economic data remain very good'. He added that the decision showed 'that Austria must become more independent from the financial markets'.

The man who tops polls ahead of France's presidential elections, Socialist Francois Hollande, said the downgrade was a punishment for conservative President Nicolas Sarkozy's policies. He lashed out at austerity measures saying they were stifling growth and France's competitivity.

The downgrade brought a downbeat end to a mildly encouraging week for Europe's heavily indebted nations and served a reminder the 17-country eurozone faces another tough year.

France's downgrade to AA+ lowers it to the level of U.S. long-term debt, which S&P downgraded last summer. S&P had warned 15 European nations in December that they were at risk for a downgrade.

Stocks fell Friday as downgrade rumors reached the trading floors of Europe and the United States. But the declines were nothing like the wrenching swings of last summer and fall, when the debt crisis threw the markets into turmoil.

'LONG ROAD' AHEAD TO WIN BACK INVESTORS' TRUST

Comments: Merkel said the decision 'won't torpedo' the work of the current, temporary eurozone rescue fund

German Chancellor Angela Merkel saID
Standard & Poor's downgrades of nine eurozone countries underline
the fact that Europe has a 'long road' in front of it to win back
investors' confidence.

Merkel today pushed for European
countries to implement 'as soon as possible' a planned pact to
strengthen budget discipline and said eurozone countries also must move
quickly to implement their permanent rescue fund - the so-called
European Stability Mechanism.

Germany wasn't downgraded by S&P, but France, with which it has co-piloted the rescue effort, lost its top-notch AAA rating.

Merkel said the decision 'won't
torpedo' the work of the current, temporary eurozone rescue fund, the
European Financial Stability Facility.

Merkel said that she had 'taken note'
of the decision by S&P, which she stressed repeatedly is only one
of three major rating agencies.

She said in a televised news
conference: 'The decision confirms my conviction that we in Europe still
have a long road ahead of us before the confidence of investors is
restored.

'But I think it can be seen that we
have set off with determination along this road (to) a stable currency,
solid finances and sustainable growth.

Merkel stressed the importance of a new treaty enshrining tougher fiscal rules, for which Germany has pushed hard.

Most European Union leaders agreed in
early December to draw up the pact, and Merkel has said the pact could
be signed as early as the end of this month, and at the beginning of
March at the latest.

'We are now called upon ... to
implement quickly the fiscal pact and implement it decisively - without
trying to water it down everywhere,' Merkel said.

Urgency: Merkel and Sarkozy said they would consider speeding up payments into the ESM

The chancellor sought to allay
concerns that the downgrade of France, the 17-nation eurozone's No. 2
economy after Germany, would complicate the work of the bloc's temporary
rescue fund, the (euro) 440 billion ($560 billion) European Financial
Stability Facility.

However, she did underline the urgency
of putting its permanent successor, the European Stability Mechanism,
in place quickly. European leaders already have decided to get it up up
and running in July, a year ahead of the original schedule; Merkel and
French President Nicolas Sarkozy said on Monday that they would consider
speeding up payments into the ESM.

The downgrades 'won't torpedo the work
of the EFSF now - I see no need to change anything about the EFSF now,'
she said. 'I am firmly convinced that the EFSF can fulfill the needs it
still has to fulfill in the coming months with the existing methods.'

She added that 'we will work to implement as quickly as possible the ESM - that is also important for investors' confidence.'

The ESM will be able to lend (euro)
500 billion. In contrast to the EFSF, it will have paid-in capital from
euro countries, similar to a bank, which makes it less vulnerable to
downgrades of its contributing states.

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French president Nicolas Sarkozy sends his PM to face cameras after credit rating is downgraded